Association of Pub. Agency Customers v. Bonneville Power Admin.

The court holds that the Bonneville Power Administration's (BPA) decision to enter or extend power contracts with several direct service industries (DSIs) was not arbitrary and capricious as alleged by a coalition of consumers, public power associations, and environmental groups. The court first addresses the coalition's challenges to the BPA's grant of long-term extensions to its agreements with the DSIs for the transmission of nonfederal power. The court first holds that the BPA has the statutory authority to transmit nonfederal power. None of the BPA's organic statutes explicitly grant the BPA authority to transmit nonfederal power. However, Congress granted the BPA an expansive mandate to operate with a business-oriented philosophy. Therefore, the BPA's statutory construction allowing the transmission of nonfederal power appears reasonable, and requires the court's deference. Next, the court holds that the BPA did not discriminate among retail power consumers in providing transmission service. The coalition and the DSIs are not similarly situated as required by the discrimination standard of the Federal Power Act. The court then rejects the coalition's argument that antitrust policies require the BPA to consider the impact of its allocation of excess transmission capacity on competition in the relevant markets. The BPA must consider the competitive effects of the transmission contracts in the markets for power and transmission services, and that command was fulfilled. The court also holds that the BPA transmission contracts do not violate the state's authority to regulate retail sales of power. Because the BPA is a federal agency, the states do not have the power to regulate BPA transmission lines. The court next holds that the BPA thoroughly considered alternatives to long-term transmission agreements for the DSIs. Finally, the court holds that the BPA's decision to execute the long-term transmission contracts is supported by the record and is not arbitrary and capricious.

The court next addresses the coalition's challenges to the BPA Block Sale Contracts. The court first holds that the rate test mechanism used in the Block Sale Contracts does not violate the ratemaking procedures of the Northwest Power Act. The BPA's statutory construction of "rate" as excluding contractual terms and conditions that do not establish monetary charges for the sale of electric power or transmissions service is reasonable and entitled to deference. And the coalition's assertion that the rate test constitutes a ratemaking outside of a rate case is not ripe for review. The court then holds that the approval of the Block Sale Contracts and the stranded cost protection afforded the DSIs in them was not arbitrary and capricious.

Last, the court addresses the coalition's National Environmental Policy Act (NEPA) challenges. The court first holds that coalition's NEPA challenge of the BPA Business Plan Environmental Impact Statement (EIS) was not filed within 90 days and, thus, was not timely. However, the equities involved allow consideration of the merits of the petition. Because the requirements were unclear, the coalition had insufficient warning of the time for appeal, and retroactive application of the court's decision would work a substantial hardship. The court next holds that the BPA did not err by issuing a single programmatic Business Plan EIS instead of a separate EIS for each contract record of decision. The court then holds that the Business Plan EIS adequately considered the cumulative impacts of the challenged contracts. The court also holds that the BPA contract negotiations for stranded cost protection are not subject to public scrutiny or comment. Only final BPA actions are reviewable, and negotiations are not final. In addition, the BPA failure to conduct an EIS prior to negotiations does not violate NEPA. The court further holds that the Business Plan EIS was not deficient for failure to provide more alternatives to the stranded cost provision. And none of the coalition proposed environmental effects that the BPA supposedly failed to address in the Business Plan EIS is sufficient to find the EIS inadequate. The court finally holds that the Business Plan EIS provided a reasonably hard look at the long-term environmental harms of the Block Sale Contracts, and that the no action alternative in the Business Plan EIS was proper.